POSTED AT 01:20 PM 21-02-2019

Economy set to grow by 4.2% in 2019

Sri Lanka will post an economic growth rate of 4.2% in 2019 and this will increase to 4.5% by 2020, said Standard Chartered’s Global Research Team’s– South Asia Economist, Saurav Anand yesterday.

Speaking at a special event in Colombo, he said however that this prediction is above the target set by the International Monetary Fund but is achievable.

He said that in 2019 the main objective of Sri Lankan government would be debt servicing and a sum of over US$ 6 million has to be settled in the first quarter. “Sri Lanka has already settled US$ one million and we are confident that the balance amount too could be raised by Sri Lanka.” This is through a US$ 2 billion sovereign bond, and US$ 1.1 billion through a SAARC Window, US$ one billion from Bank of China and the rest from the RBI (US$ 400 million) and other means.

He also said that to achieve these targets there should be micro stability and the government will have to maintain a tight monetary policy, while the Central Bank too has to maintain Policy rates unchanged. “Overall 2019 would be a tough year for Sri Lanka”.

Asked to predict on foreign inflows to Sri Lanka he said that with several elections due in 2019, there would be stronger FDI in 2020. He also predicted that the major FDI would be for the Colombo Port City Development and for the Hambantota Economic Zone.

Anand said that while the Sri Lanka constriction sector will not show growth the private and the banking sector should do well in 2019.

He also said that they also foresee that the IMF talks to end positively and the program to be extended.

“This would be a good sentiment for investors.” Anand is responsible for macroeconomic coverage of Bangladesh and Sri Lanka, as well as some aspects of India.

Global Chief Economist, David Mann of Standard Chartered said that the economic wave that ASEAN enjoyed will soon focuses in the direction of South Asia.

He said the ageing population is a huge issue not only for China and Japan but also to Korea and Taiwan as well.

Commenting on the global economy he said that though there is a truce, the US China trade war tensions still remains. “However the global economy would do better in 2019, since some of the main concerns like crude oil prices were unlikely to be high.

Head of ASA FX Research Divya Devesh said that one major factor to support the US dollar was the US growth which was strong. “However we now see that there is a slowdown in the US economy which in turn will somewhat help the US dollar to likely be lower. This is due to Trump’s policies and would also positively reflect in Sri Lanka in term of the US dollar in 2019”.